ACCJ Journal June 2019 by Custom Media KK

JUNE 2019 VOL. 56, ISSUE 6

THE AUTHORITY ON GLOBAL BUSINESS IN JAPAN

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UNITEDLIFE Finding work–life balance and social change through global experience 34

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CONTENTS VOL. 56, ISSUE 6

COVER PHOTO Venture capitalist Eriko Suzuki — Page 34 THIS PAGE WeWork Ginza Six PHOTO: WEWORK

— Page 20

5 EDITOR’S DESK Green Earth C Bryan Jones

7 PRESIDENT Great Together An opportunity we cannot afford to miss

Peter M. Jennings

8 ACCJ EVENT Forum on US–Japan Collaboration on Investing in the Future Arthur M. Mitchell

11 ACCJ EVENTS Walkathon, Spring Meet and Greet, Nipponomics, GDPR, sake investing, and more

12 SME Growing Business at the ACCJ Advisory council helps small and medium-size members

Harry Hill

15 VIEWPOINT Cosmetic Changes Bringing Japan’s quasi-drug and cosmetics systems up to date

the toiletries, cosmetics, and fragrances committee

20 REAL ESTATE

40 PARTNER CONTENT

Staff Magnets

Over-tourism

Developers, innovators offer new office options

Can Japan handle Abe’s visitor push?

Julian Ryall

nikkei asian review

26 FITNESS

47 MARKETING

Time to Train

Stay relevant with AI

Personal fitness options for busy Tokyo execs

Are you taking full advantage of technology?

Megan Casson

Robert Heldt

30 ENERGY

49 J-MEDIA

Carbon Zero

Diet Dailies

Five-part Inspiration

The business case for renewable electricity

Single-payment insurance

ACCJ-Kansai WIB Leadership Series 2019

C Bryan Jones

translation of news from Keizaikai

18 KANSAI

Nadine Slater

DISCLAIMER Custom Media and the ACCJ will not accept liability for any damages caused by the contents of The ACCJ Journal, including, but not limited to, any omissions, errors, facts or false statements. Opinions or advice expressed in the The ACCJ Journal are not necessarily those of the ACCJ or Custom Media.

34 ENTREPRENEUR United Life Finding work–life balance and social change through global experience

John Amari

Higher tolls during Olympics

Advertising Sales Manager Garreth Stevens

Publisher Simon Farrell simon@custom-media.com

Account Managers Edvard Vondra James Greer

President Robert Heldt

Business Development Leon van Houwelingen Jody Pang Kotaro Toda

Editor-in-Chief Christopher Bryan Jones Art Director Ximena Criales

Head of Project Management Megumi Okazaki

Senior Graphic Designer Michael Pfeffer

Project Coordinator Ayako Nakamura

Graphic Designer Charlotte Boisdequin

Media Coordinator Misa Yashiro

Staff Writers Alec Jordan Megan Casson Nathalie Muto Web Developers Brian Susantio Devin Surya Putra

HONORARY PRESIDENT

William F. Hagerty IV United States Ambassador to Japan PRESIDENT

Peter M. Jennings Dow Chemical Japan Ltd. CHAIRMAN

Christopher J. LaFleur McLarty Associates TREASURER

Nancy Ngou EY Japan VICE PRESIDENTS

Amy Jackson Pharmaceutical Research and Manufacturers of America (PhRMA) Marie G. Kissel Abbott Ray Proper (Chubu) H&R Consultants K.K. Eric W. Sedlak K&L Gates LLP Yoshitaka Sugihara Google G.K. Ryann Thomas PwC Tax Japan Dr. Stephen A. Zurcher (Kansai) Kansai Gaidai University GOVERNORS

Ryan Armstrong Aflac Life Insurance Japan, Ltd. Eriko Asai GE Japan Inc. Alison Jane Espley United Airlines, Inc. Rebecca K. Green ERM Japan Douglas L. Hymas The Bank of New York Mellon Tad Johnson Pratt & Whitney Aftermarket Japan KK Patrik Jonsson (Kansai) Eli Lilly Japan K.K. Mari Matthews AIG Japan Holdings K.K. Arthur M. Mitchell White & Case LLP Jenifer Simms Rogers Asurion Japan Holdings G.K. William J. Swinton Temple University, Japan Campus Hiroshi Ueki Goldman Sachs Japan Co., Ltd. Michel Weenick (Chubu) Hilton Grand Vacations

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PRESIDENTS EMERITI

Publishers of The ACCJ Journal for the American Chamber of Commerce in Japan, Custom Media is an award-winning bilingual, digital integrated marketing, content creation, and strategic communications agency in Tokyo. Our focus is on print and digital publications, marketing solutions, social media, branding, websites, apps, and videos in three areas: strategy, creation, and digital.

Debbie Howard (2004–2005) Charles D. Lake II (2006–2007) Allan D. Smith (2008) Thomas W. Whitson (2009–2010) Michael J. Alfant (2011–2012) Christopher J. LaFleur (2016–2017) Sachin N. Shah (2018–2019) CHAIRMAN EMERITUS

Kumi Sato Cosmo PR ACCJ EXECUTIVE STAFF

Laura Younger Executive Director

www.custom-media.com Daiwa Azabudai Bldg. 6F 2-3-3 Azabudai, Minato-ku, Tokyo 106-0041

Information as of May 24, 2019

The American Chamber of Commerce in Japan Masonic 39 MT Bldg. 10F, 2-4-5 Azabudai Minato-ku, Tokyo, Japan 106-0041 Tel: 03-3433-5381 n Fax: 03-3433-8454 www.accj.or.jp The ACCJ Journal is printed on paper certified by the US Forest Stewardship Council with vegetable oil ink certified by the Japan Printing Ink Makers Association.

THE ACCJ JOURNAL

JUNE 2019

The ACCJ is an independent membership organization not affiliated with any government or other chamber of commerce. The ACCJ is a member of the Asia-Pacific Council of American Chambers and values its relationships with Japanese, American and other nations’ business organizations.

Green Earth. As a result of his themes, Robinson has become known as the “master of disaster.” Of course, his mastery is not of creating catastrophe but rather of placing warning signs of what’s to come. Christopher Bryan Jones chris@ custom-media.com

In 2004, American science fiction author Kim Stanley Robinson released a novel entitled Forty Signs of Rain, which warned of the impact climate change would have in the early decades of the 21st century. In the story, the United States is struck by catastrophic flooding. Two more novels—Fifty Degrees Below (2005) and Sixty Days and Counting (2007)— followed, completing what is now known as the Science in the Capital series, due to its focus on the challenge of getting lawmakers to take climate change seriously. In 2015, the trilogy was republished as a single volume:

ONE STEP BACK Parts of our society seem determined to ignore the clear warnings of climate change, and I’ve grown dismayed at the rising volume of dissent. While researching my story on renewable electricity (page 30), I was surprised at how frequently I came across “climate change debunked” articles. While science and observation paint a clear picture of increasing carbon-dioxide levels in the atmosphere, as well as rising temperatures and sea levels, measures put into place to mitigate the threat are being rolled back. Pair this with the findings of a study that was released while I was writing, one that suggests temperatures and sea levels may double previous estimates by 2100, and you have something that might shock even Robinson. TWO STEPS FORWARD Businesses, however, realize that a green Earth is a more profitable one, and I was

EDITOR’S DESK

GREEN EARTH heartened by what I discovered as I ex plored the RE100 initiative. For example, I did not realize that 16 Corporate Sustaining Member companies of the American Chamber of Commerce in Japan are part of this group that aims for zero carbon and the use of 100 percent renewable electricity by 2050. Seeing the forward-looking efforts these leading companies are making to save the planet gives me hope. Perhaps the calamities of Robinson’s story will never come to be, and we won’t be faced with a last-ditch effort to salvage what we can of a withering world. After all, healthy business depends on a healthy economy and healthy consumers. In 2018, Robinson received the Arthur C. Clarke Award for Imagination in Service to Society for his entire body of work. Perhaps in 2118, the companies of the RE100 will be recognized for their service to society. n

A flagship publication of the American Chamber of Commerce in Japan (ACCJ), The ACCJ Journal is a business magazine with a 56-year history.

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Great Together An opportunity we cannot afford to miss

PRESIDENT

By Peter M. Jennings ACCJ President

recent editorial on US President Donald Trump’s vision to “Make America Great Again” crystallized for me how critical US businesses are as a component of Japan’s economy, and how essential the role that ACCJ members play is to the greatness of both the United States and Japan. US businesses maintain strong and mutually beneficial partnerships with Japanese companies, and continue to invest in manufacturing, technology, as well as research and development (R&D)—not to mention intellectual property—that are integral to Japan’s future. TURNING POINT It is clear to me that we have reached a critical time if we are to ensure that a comprehensive bilateral trade agreement is reached—not only for US businesses but also for the continued global competitiveness of Japan’s industries and markets. This is a decisive moment if employment is to be sustained in high-skilled growth-area jobs in both economies, and the highvalue opportunities being realized through bilateral business partnerships are to be maintained. This is a message we carried to Washington, DC, in April through our 14-strong delegation that included 10 Japan-based CEOs of US companies. In our meetings with representatives of Congress and the Trump administration, we made it clear that— beyond its commercial importance as a destination market for US exports—Japan is an indispensable US security and geopolitical ally in a vitally important part of the world. Under Trump’s Indo–Pacific strategy, Japan is a key partner in advancing a range of US interests in the region. Tokyo is collaborating on energy security and efforts to promote US energy exports, promoting quality infrastructure development in emerging economies, and advancing a fair, transparent, and rules-based system for global trade and investment. Strengthening our trade and economic partnership will enable both countries to more strategically engage in the region and expand their influence around shared values. BUSINESS BENEFITS The Dow 30, also known as the Dow Jones Industrial Average (DJIA), is a parable for how closely the economies are entwined. Its composition reflects the dominant sectors that propel the US economy. And of the 30 companies whose stocks comprise the DJIA, 27 are ACCJ members. Many have been doing business in Japan for decades and are literally household names here. While some manufacturers

have significant plants and an R&D presence in both the United States and Japan, Nasdaq stocks have experienced significant growth in Japan. Those companies employ thousands of Japanese workers and are increasing those numbers. Their growth trajectory continues to be remarkable as the Japanese economy is transformed. To trace the impact, I turn to my own company, Dow Chemical. Our history here stretches back 67 years—to 1952— when Dow forged its first joint venture outside the United States. Since then, we have expanded and partnered with other top-ranked Japanese players. Today, the 1,500 people at Dow Japan and our affiliated companies are leading the industry in terms of environmental health and safety, corporate social responsibility, and developing sustainable solutions to pressing global challenges that contribute to Dow’s success in the United States and globally. Dow’s deep roots and place at the forefront of growth, innovation, and investment in Japan are key for thousands of Japanese and Americans. NOW IS THE TIME In the more than 40 meetings held during the April 1–4 DC Doorknock, it was clear that Japan is recognized in Washington as the most important ally the US has in Asia. The importance of the economic, trade, investment, national security, and military alliances—and many years of friendship—to the success of both countries cannot be overstated. It is largely as a result of bilateral and multilateral trade negotiations, and Japan’s own domestic reform efforts, that US businesses have achieved greater access to the Japan market over the past several decades (notwithstanding some exceptions). Today, the administration of Japanese Prime Minister Shinzo Abe is pursuing reforms that are yielding further improvements that could help grow the economy to the benefit of all. Now is the time for constructive US–Japan trade negotiations that serve to provide access to the full potential of markets in the world’s second- and third-largest economies. Doing so will help facilitate trade that will bring benefits to consumers in both nations through the growth of innovation, investment, and high-skilled jobs. I am always keen to hear from our members, on this or any other matter. Write to me with your views at pjennings@accj.or.jp n

The importance of the economic, trade, investment, national security, and military alliances . . . to the success of both countries cannot be overstated.

THE ACCJ JOURNAL

JUNE 2019

ACCJ EVENT

Forum on US–Japan Collaboration on Investing in the Future By Arthur M. Mitchell

tronger partnerships between the United States and Japan are key to the prosperity of both nations as we chart a path into an uncertain future. The business community has an important leadership role to play in the formation of closer, mutually beneficial ties, and the American Chamber of Commerce in Japan (ACCJ) and the Japan External Trade Organization (JETRO) jointly explored this topic on April 24 at an invitation-only C-suite event hosted at The Peninsula Tokyo. The gathering, entitled “Forum on US–Japan Collaboration on Investing in the Future,” took place just one week before the dawn of a new era in Japan, as the abdication of Emperor Akihito brought the Heisei Period to an end and the coronation of Crown Prince Naruhito marked the beginning of Reiwa. This new era presents an opportunity to make an assessment as to where things stand, where Japan will go in the future, and how both Japan and the United States will further promote mutual bonds. A group of high-level discussion leaders and panelists were assembled for this forum, and they analyzed the obstacles and opportunities in five sectors (see sidebar). From this emerged three key themes: Connectivity Mobility ■ Community of interests ■ ■

One consistent message was that technology—artificial intelligence (AI), autonomous systems, ubiquitous sensors, and advanced manufacturing—will drive the future. Digitalization, the internet, broadband, mobile devices, and 5G cellular networks will be the delivery vehicles. CONNECTIVITY As these technologies indicate, the key to harnessing flows of knowledge and investment is connectivity, and cooperation between the United States and Japan in Asia in rule-making for the digital economy is of key importance for our future prosperity. JETRO Chairman and CEO Nobuhiko Sasaki

THE ACCJ JOURNAL

JUNE 2019

highlighted this fact in his dialogue with ACCJ President Peter M. Jennings during the luncheon session, which I moderated. Tokyo Governor Yuriko Koike also spoke at the forum and explained how the city has already bloomed as the smartest in Asia. This was achieved, she said, by fostering: Environmentally friendly construction policies New ways of transforming public transportation ■ Data links between government, Big Data, and the Internet of Things (IoT) ■ ■

Governor Koike also said that she aims to showcase the Japanese capital as the best city in the world by the time of the Tokyo 2020 Olympic and Paralympic Games. Fifty years ago, the United States accomplished another technological feat by landing a man on the moon. Since the time that the crew of Apollo 11 set foot on the lunar surface, ushering in a bold new age of exploration, our relationship with space has expanded by leaps and bounds. We are now at a point where a frontier once dominated by government is accessible by, and presents opportunities to, the private sector. While Jeff Bezos’s Blue Origin LLC, Richard Branson’s Virgin Galactic, and Elon Musk’s Space Exploration Technologies Corp.—better known as SpaceX—get most of the headlines, Japan is home to some serious space innovation as well. The founders and chief executive officers of two such companies—iSpace Inc.’s Takeshi Hakamada and Astroscale’s Nobu Okada—took part in a session entitled “New Frontiers in Outer Space.” In the discussion moderated by Garvey McIntosh, NASA attaché to the Embassy of the United States, Tokyo, Okada and Hakamada looked at ways in which private companies are getting involved, such as making plans to conduct mining operations on the moon and clearing Earth’s orbit of dangerous amounts of manmade debris—a task in which Astroscale specializes.

MOBILITY Down here on Earth, mobility is not just a key feature of data, it is also a characteristic of people and money—both of which move in and out of Japan in exceptional ways. This was addressed in a panel entitled “The Future of Sports and Tourism.” The administration of Japanese Prime Minister Shinzo Abe has set a target of 40 million inbound tourists each year by 2020 and 60 million by 2030. The country is well on course to meet these goals. And while some logistical barriers still exist, the Olympics and Paralympics—as well as the Rugby World Cup this year— are expected to provide both tangible and intangible legacies, including opportunities to further develop sports as business. If we can rise to the challenge, Japan can become a role model for the world. Foreign direct investment (FDI) is important if Japan is to take full advantage of these opportunities and sustain the benefits long term. Although FDI levels are still low compared with countries such as the United States, China, the Netherlands, Ireland, and Australia, it is steadily increa sing as investors become more aware of comprehensive policies designed to promote FDI. These policies and incentives include tax reductions, corporate governance reform, deregulation, and the streamlining of administrative processes. The United States is the largest source of FDI in Japan, and will likely continue to be as new ideas and business models migrate here. COMMUNITY OF INTERESTS Both Japan and the United States have long been major sources of innovation. Government support for research and development of technology has played a key role in both countries. It is now widely understood that government cannot pick winners and losers, but it can foster an envi ronment for innovation by setting appropriate rules. While the United States and, importantly, China may have taken the lead in AI and Big Data, our panel concluded that it is likely that Japan will provide leadership in certain areas such as robotics, healthcare, and the extension of IoT to the manufacturing process. The panel on Tokyo as a financial center highlighted the importance of developing new ways to think about how to provide financing for investments in new business models and technologies, as well as how to provide for post-retirement income in an aging society. Upon reflection, we can see that all the issues discussed during the forum are related. And as the speakers made clear, unlocking the creativity and innovation of the Japanese people requires that:

Communication and transportation links be strengthened Technology and business models be exchanged more quickly ■ Strategic cooperation on global policy issues be enhanced ■

■

Only in this way can the benefits of connectivity and mobility be achieved within the context of the beautiful harmony promised by the new era. n

SESSIONS AND SPEAKERS Session 1: The Future of Sports and Tourism Cynthia Usui, chair, ACCJ Tourism Committee Jonathan Kushner, chief communications officer, McDonald’s Holdings Company (Japan) Ltd. Sonja Vodusek, general manager, The Peninsula Tokyo Masato Mizuno, chairman, Mizuno Corporation (moderator) Session 2: Foreign Direct Investment in Japan: Accelerating in New Directions Shigeki Maeda, executive vice president, JETRO Mario Stein, president and representative director, Johnson & Johnson Consumer Company Yoshiyuki Tanaka, president, DuPont K.K. David Milstein, head of Japan, Eight Roads Ventures Ken Lebrun, chair, ACCJ FDI Committee (moderator) Session 3: Japan as an Innovation Center Taro Shimada, corporate vice president, general manager of the Cyber-Physical System Promotion Division, and chief strategy officer, Toshiba Corporation Michael Alfant, group CEO, Fusion Systems Heizo Takenaka, professor emeritus at Keio University and professor at Toyo University (moderator) Session 4: New Frontiers in Outer Space Nobu Okada, founder and CEO, Astroscale Takeshi Hakamada, founder and CEO, iSpace Garvey McIntosh, NASA Asia Representative, the Embassy of the United States, Tokyo (moderator) Session 5: Tokyo as a Financial Center Keiko Tashiro, deputy president, Daiwa Securities Yoshiki Minowa, vice president of Service Strategy, IBM Global Business Services Oki Matsumoto, chairman and CEO, Monex Group, Inc. Jesper Koll, CEO, WisdomTree Japan (moderator)

SPECIAL THANKS TO . . . Peter M. Jennings, president, ACCJ Ken Lebrun, chair, ACCJ FDI Committee Nobuhiko Sasaki, chairman and CEO, JETRO Shigeki Maeda, executive vice president, JETRO Sonja Vodusek, general manager, The Peninsula Tokyo Junjiro Yamashita, director, The Peninsula Tokyo

Arthur M. Mitchell is ACCJ governor and senior counselor at White & Case LLP.

THE ACCJ JOURNAL

JUNE 2019

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ACCJ EVENTS

1 The 28th ACCJ/NIS Chubu Walkathon took place at Moricoro Park in Nagoya on May 19. This year’s event was patterned on Japan’s Sports Day events in schools.

2 More than 50 members and guests gathered for great food, drinks, and networking at the 2019 ACCJ-Kansai Spring Meet and Greet at The Place Kobe on April 19.

3 Miyako Ikuta and Ryosuke Naka of Kitahama Partners gave a workshop-style presentation about the European Union’s General Data Protection Regulation from the perspective of Japanese businesses at the Kitahama Partners office in Osaka on April 17.

4 WisdomTree Japan Chief Executive Officer Jesper Koll outlined why Japan has what it takes to be an economic powerhouse and global leader in his presentation “The Power of Nipponomics: Capitalism that Works” at Tokyo American Club on May 17.

5 The ACCJ Sales Development and Independent Business Committees hosted a multinational networking bash with the Italian Chamber of Commerce in Japan at the Mercedes Benz Connection in Nogizaka on April 25.

6 ACCJ Alternative Investment Committee Chair Frank Packard (right) with EY Advisory & Consulting Co., Ltd. Associate Partner Harald deRopp (left) and Obata Sake Brewery owner Rumiko Obata, who presented at the networking event “Passion Investing in Sake from Sado Island” at The Place of Tokyo on May 22.

UPCOMING EVENTS Please visit www.accj.or.jp for a complete list of upcoming ACCJ events or check our weekly e-newsletter, The ACCJ Insider.

• JUNE 12

Sarah Casanova ‘My Leadership Journey’ (Kansai Event) • JUNE 14

How to Utilize Academic Translational Research for Medical Development • JUNE 19

US Visa Update: Current Policies and Predictions for the Future

• JUNE 24

A (Not-So) Clear and Present Challenge: How to Identify and Deal with Mental Illness in the Workplace

facebook.com/The.ACCJ twitter.com/AmChamJapan youtube.com/user/AmChamJapan linkedin.com/company/ american-chamber-of-commerce-in-japan

THE ACCJ JOURNAL

JUNE 2019

SME

Growing Business at the ACCJ Advisory council helps small and medium-size enterprise members By Harry Hill

have been building companies for more than 30 years. As a result, I know all too well the unique challenges faced by small and medium-size enterprises (SMEs). But I also know that such businesses—through their innovation and agility—are capable of seizing opportunities to change the face of business in Japan in ways that their larger counterparts may not be. SUPPORTING SMEs The American Chamber of Commerce in Japan (ACCJ) recognizes the need to support its SME members with the right set of resources, tools, and connections. Our goal is to enable this important community to grow their business and receive recognition of their achievements. One way in which the chamber is supporting SMEs is through the introduction of the Small Company Package, a membership option designed to provide commercial membership benefits at a discounted cost to SMEs with fewer than 30 employees. Another key step taken in early 2018 is the establishment of the SME CEO Advisory Council. This group, comprising leaders of SME member companies, provides the president and the Board of Governors with advice on how the ACCJ can best serve this important member segment. I am honored to have been appointed as the inaugural chair by then-President Sachin N. Shah and to retain the role under the leadership of President Peter M. Jennings. OPPORTUNITIES A key mission of the SME CEO Advisory Council is to strength en the ACCJ as the voice of the diverse members represented by SMEs. The council works to build on the strong foundation of the chamber to expand the impact of, and enhance business opportunities for, SMEs. These efforts are aligned with the ACCJ’s three main pillars:

Networking Information sharing ■ Advocacy ■ ■

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The need for this focus on recognition and growth came about as the result of interaction with members alongside focused research and extensive analysis conducted as part of the Membership Value Project (MVP). The MVP was an initiative designed to understand how shifts in the composition of the ACCJ affected the value of membership. Between 2010 and 2017, the total number of members grew 26 percent, and that growth brought with it more women, more nationalities, and a greater diversity of company types and sizes. This happened at the same time that the business environment in Japan was changing, creating new opportunities and challenges for US companies. These changes particularly affect SMEs, and the MVP has revealed a clear desire, among these businesses and their leaders, for a stronger support network and greater representation in ACCJ decision-making. One galvanizing factor for this has been the US tax reforms of December 2017, which created the Global Intangible Low Taxed Income provision—commonly known as GILTI. This new rule, with its unexpected consequences, has spurred the need for advocacy support for individual US taxpayers who own businesses in Japan. ACTION The council’s advocacy efforts have already been seen in its close coordination with the Taxation Committee—now a standing presence on the council— and with SME representation at the September 2018 mini-DC Doorknock, as well as the recent 2019 DC Doorknock (see sidebar). Both trips to Washington highlighted the significant impact of GILTI and the Transition Tax on US-owned small businesses in Japan. These discussions raised awareness of the issue and provided recommendations to policymakers on how to mitigate the impact. The council also has a direct line of contact to the ACCJ Board of Governors. By sharing the opinions and business priorities of SMEs with the chamber leadership, we can help the ACCJ better serve and engage with its SME members.

SME CEO ADVISORY COUNCIL MEMBERS Harry Hill, member of the board, New Business Development, Oak Lawn Marketing, Inc. Mike Alfant, group CEO, Fusion Systems Group

TAKING ACTION

Barbara Hancock, vice president, MediaSense K.K. Frank Packard, president and representative director, Triple A Partners Japan Co., Ltd. Kiran Sethi, president, Jupiter International Corporation Thomas Shockley, president and CEO, DocuMonde Inc. Andrew Silberman, president and chief enthusiast, Advanced Management Training Group K.K. Cecilia Reiko Mikumo, executive vice president, Think Out of the Case K.K. Bryce Conlan, president, H&R Consultants K.K. Eric Wedemeyer, managing director, Tactus Partners

In 2019, the council’s focus areas include: Raising member company profiles and business opportunities ■ Gaining participation of, and representation for, SME members in ACCJ bodies and activities ■ Connecting with SME organizations outside the chamber ■ Identifying member concerns ■ Establishing a standing liaison with the ACCJ Taxation Committee to focus on SME issues, such as GILTI ■ Promoting opportunities for SME members to run for the Board of Governors ■ Representing the voice of SMEs in the DC and Diet Doorknocks ■

LOOKING AHEAD This column is the first installment in a quarterly series, and I plan to use the space to take a deeper look at issues specific to SMEs. I will also use this as a place to highlight our SME members and their achievements, connect our member companies, and enhance their business opportunities. The ACCJ is always evolving to meet the needs of its members and to reflect the changing business landscape. I look forward to hearing from SME members who wish to step forward and share their views and needs with us, and from companies wishing to highlight their innovations and business achievements. Please feel free to contact me with your ideas, questions, and comments at sme@accj.or.jp n

Harry Hill is member of the board, New Business Development, at Oak Hill Marketing Inc. and chair of the ACCJ SME CEO Advisory Council.

GILTI AND DC DOORKNOCKS The consequences of the Tax Cuts and Jobs Act of 2017 (TCJA), the official name of the tax reforms enacted by the administration of US President Donald Trump, have raised serious concerns among US citizens who own companies in Japan. Since its formation, the SME CEO Advisory Council has made the Global Intangible Low Taxed Income (GILTI) provision a focus of its advocacy efforts. In September 2018, Frank Packard and I made a special trip to Washington for a mini-DC Doorknock. Our purpose was specifically to discuss the impact of GILTI on US businesses in Japan. Although the TCJA includes many good things that have served to lower the corporate tax rate domestically, some of the language was poorly drafted and has left many small business owners abroad potentially exposed to extremely high tax liability. GILTI, as well as another provision known as the Transition Tax, have the potential to destroy US companies overseas. For example, under the current wording of GILTI, one ACCJ member who owns a Japanese SME could find themselves saddled with a tax rate of more than 70 percent. Many others find themselves in the same situation, and the chamber sees this as an existential threat. We received a warm reception when we took our concerns to Washington, where we met with about 20 members of Congress, representatives from the US Department of the Treasury, the Senate Committee on Finance, the House Committee on Ways and Means, and the chief tax counsels for both the Democrats and the Republicans. There was a lot of interest in what we had to say. The ACCJ is well respected in Washington and we have a seat at the table. Thanks to the hard work of those chamber members who came before us, we are able to get meetings with those who have the power to change how these tax rules affect US businesses in Japan. The issue of GILTI and the Transition Tax was raised again in April during our full DC Doorknock, which was led by ACCJ President Peter Jennings. A 14-person delegation that included 10 chief executive officers of Japan-based US Fortune 500 companies held meetings with senior officials from the Office of the Vice President, the National Security Council, the Office of the US Trade Representative, the Department of Commerce, the Department of State, and the Department of the Treasury, as well as with more than two dozen congressional leaders. The primary focus of this trip was the bilateral US–Japan trade agreement, but the opportunity to follow up on and reinforce our September tax-related agenda was invaluable, and we are optimistic that these efforts will lead to a positive outcome.

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VIEWPOINT

Cosmetic Changes Bringing Japan’s quasi-drug and cosmetics systems up to date By the Toiletries, Cosmetics, and Fragrances Committee

n 2016, the Basic Act on the Advancement of Public and Private Sector Data Utilization came into force in Japan. It requires implementation of measures required to ensure that an “application, notification, notice of a disposition, or any other procedure pertaining to an administrative organ, etc.” is, in principle, handled by means of an electronic data processing system. In the same year, the governmental Pharmaceuticals and Medical Devices Agency (PMDA) started accepting the electronic submission of the clinical data required for new drug registration. For quasi-drugs (QDs) and cosmetics, however, applications and notifications must be submitted on storage media such as disk or using a paper form. These administrative requirements are outdated compared with those of the European Union (EU), the Association of Southeast Asian Nations, and South Korea, where online product registration and notifi cation systems are used. The present system is cumbersome and creates delays. The American Chamber of Commerce in Japan (ACCJ) recommends that the Ministry of Health, Labour and Welfare (MHLW) introduce an online product registration and notification system for QDs and cosmetics. We also recommend that this online system be linked with the online system that is already in place for customs clearance to allow cosmetic companies to complete registration or notification procedures and customs clearance at the same time. INTERFACE NEEDED The MHLW has requested funds in the fiscal 2019 budget for initiatives to update the registration procedure system for drugs, medical devices, and other medical products by creating a new online submission function. The ACCJ recommends that the MHLW take swift action to introduce such a system for QDs and cosmetics, as well as for drugs and medical devices.

In the case of customs clearance of imported QDs and cosmetics, QD approval documents and cosmetic product notifications must be submitted to the customs office even though the information is already available in the systems used by the PMDA and prefectural governments. This is because each uses an independent system that does not interface or share information with the others. The ACCJ recommends that the MHLW take the initiative to integrate the systems of the PMDA, prefectural governments, and customs. By not requiring cosmetic importers to submit the same documents to customs they have already submitted to the PMDA or prefectural governments, the customs clearance process can be simplified and accelerated. FAIR COMPETITION An online product registration and notification system would play a key role in establishing a simple and efficient data management process that would take full advantage of information technology—a stated goal of the Japanese government. The ACCJ believes that the introduction of such a system would reduce the burden on cosmetics companies and promote efficiency of administrative management, which would allow both cosmetics companies and the government to use their limited resources for development of safe and more innovative products. The ACCJ also believes that system integration among the PMDA, prefectural governments, and customs would promote fair competition with Japan-made products, pro viding Japanese consumers with faster access to a wider choice of imported and domestically produced QDs and cosmetic products. SIMPLIFY REGISTRATION With the aim of providing more options for consumers with varying product preferences and needs, the pre-market appro

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The present system is cumbersome and creates delays. val system for cosmetics was abolished in 2001, and a system that applies standards for cosmetics ingredients (negative/ restricted list and positive list for preservatives, UV filters, and tar colorants) was introduced together with a requirement to include all ingredients on cosmetics labeling. The new system allows cosmetics companies to release products to market and shoulder responsibility for the products without obtaining approval from the MHLW. This means that cosmetics products will be able to reach consumers faster and will bring Japan’s cosmetics regime into closer alignment with the global best practices of the systems found in the United States and the EU. In contrast to the cosmetics system, marketing of medicated cosmetics, which are categorized as QDs in Japan, is still highly regulated and requires that approval be obtained from the MHLW prior to marketing and sales, despite the fact that the intended uses and applications of medicated cosmetics are almost identical to those of regular cosmetics. This more restrictive system can hinder the timely market launch of innovative products that consumers want. APPROVAL PROCESS QDs that contain new active ingredients require pre-market approval and a thorough review by the MHLW of their efficacy, safety, and quality. This is natural and prudent, especially considering recent safety incidents in the medicated cosmetics market. The ACCJ urges, however, that the MHLW reduce the time required to obtain approval for those QD products that are recognized to be similar to products already approved. Currently, approvals for such QD products can take five months or more. The ACCJ appreciates the attempts that have been made by the MHLW and the PMDA to increase transparency and shorten the time needed to carry out QD registrations. However, they are not enough. EFFORTS TO CHANGE The Japan Cosmetics Industry Association issued registration guidance for Medicated Shampoo and Conditioner, which lists approved active ingredients and the approved levels of these ingredients in product formulae, as well as efficacy and usage. This guidance was submitted to the MHLW, which published it as a regulatory notice on May 2, 2014. Similar registration guidance for Medicated Soaps was created and published by the MHLW as a regulatory notice on March 29, 2018. Although the introduction of this guidance was intended to reduce the time needed for registering products with the active ingredients to which the guidance refers, there has been no practical change in the review process by the PMDA, and no reduction in the product registration times has been confirmed. The ACCJ recommends that this registration guidance be made for all medicated cosmetics and be used as the standard for product approvals in such a way that the MHLW can then delegate reviews of products to local prefectural governments. This could finally reduce the time required for reviews.

SPEC CODEX The PMDA, in an effort to increase transparency and reduce the time required for reviews, collected specifications of besshi kikaku (inhouse specification) ingredients, which have been previously approved for use by consumers but lie outside the compendium of approved ingredients. The agency then issued those specifications as the Quasi-Drug Additives Spec Codex, which was most recently updated on December 6, 2017. Because raw materials suppliers or cosmetics companies were concerned about the impact on their businesses of publicly disclosing the specification information—which could be proprietary intellectual property—only a limited number of ingredients were identified, and their specifications published in the Codex. The limited nature of the specification infor mation made available underscores the need to introduce a new system which can better protect proprietary ingredient information while, at the same time, simplifying the process required for QD registrations and PMDA review. ACCESSING INNOVATION Process simplification for QDs will expand the choices for consumers to meet a variety of demands and preferences for medicated cosmetics, just as consumers have with regard to ordinary cosmetics. This will allow consumers to access the most innovative products developed in Japan, as well as in other parts of the world, at a reasonable price. At the same time, it will also allow the PMDA and the MHLW to focus their efforts and resources on the review of new ingredients and high-level technologies, as well as on drugs and medical devices, so that Japanese consumers will have faster access to those as well. n

INTEGRATED SYSTEMS would simplify and speed up the process

PMDA

PREFECTURES

CUSTOMS

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K ANSAI

Five-part Inspiration ACCJ-Kansai WIB Leadership Series 2019 By Nadine Slater

he energy in the room is high. At the end of the fifth and final session of this year’s ACCJ-Kansai Women in Business (WIB) Leadership Series at the Hilton Osaka, some 60 leaders-in-the-making from 10 global companies across multiple industries are excitedly sharing with one another what they have learned. During the series, the heads of five American Chamber of Commerce in Japan (ACCJ) member companies openly shared their leadership journeys, as well as the highly diverse experiences and challenges they have encountered along the way. They also offered practical advice to help participants succeed in their own careers. CHANGING MINDSETS Those who attended all five workshop-style, interactive pre sentations received certificates to mark their graduation from the program. But what they have gained over the past four months cannot be fully reflected by the graduation certificate nor put in one-dimensional terms. Together, by learning from and engaging with three male and two female executives in a small group setting, participants have not only been inspired about leadership in practical terms and become more self-aware, the view they have of themselves as leaders has also been changed. Sharing experiences and connecting within the group, across companies and industries, has made a huge difference. In short, the men and women attending the Leadership Series have come out of their shells and are ready to embrace new levels of leadership. And they are excited to be already putting some of the actionable takeaways into practice. “I realized that leadership is a skill, and I can learn how to lead,” one participant said. “This has really changed my mindset. I want to become a good leader who can show the goal to the team and coach my colleagues how to get there together.” The important shift in mindset from manager to leader really helped the participants think about what concrete steps they want to take to develop themselves and to better support

their teams. Their ideas evolved noticeably as they shared with each other and interacted with the speakers; at the same time, they became increasingly comfortable and confident asking questions and daring to be vulnerable. Reflecting on the five leadership journeys presented, another participant felt relief and encouragement. “I should just start with the action and learn along the way, because nobody is perfect; and we don’t have to be perfect.” It is called a leadership “journey,” after all. REGIONAL SUPPORT Now in its eighth year, the Leadership Series started in fall 2011 as an ACCJ program to support the global talent development of ACCJ Corporate Sustaining Members based in the Kansai region. These companies nominated their team members for this exclusive program. Since then, support from top executives as speakers has flourished and the series has become more and more popular with participants. Over the past eight years, 426 young leaders from 19 companies in diverse industries such as pharma, hospitality, insurance, consumer goods, retail goods, banking,

AstraZeneca Japan President Stefan Woxström takes a question.

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travel, and industrial machinery have benefited. Not only have they built their own cross-company networks, they have also grown into more confident, effective, and inclusive leaders thanks to the mutual inspiration found at these sessions. “It was especially inspiring to hear about failures, which is very rare coming from senior leaders,” one participant said. Another summed up her key insight, saying, “All leaders have a different style of leadership, and it is important to find my own unique way. In doing so authentically, I am now more aware than ever that communication is key—in particular listening more than speaking.” These tributes to the Leadership Series have been echoed by alumni from previous years. One graduate of the 2016 program, Yoko Tanimura of Bayer Yakuhin, Ltd., gratefully described the sustained impact the program has had on her development. “It was such a valuable experience that we rarely come across. After the Leadership Series, I was ready to go on my journey to find my own leadership style and seek personal growth,” she said. “It was such an opportunity to hear successful—and sometimes not so successful—true leadership stories from the senior management, which you could, in fact, easily relate to yourself.”

Nadine Slater with AIG Japan President Bob Noddin

THANKS TO LEADERS None of this would be possible without the dedication and support of the speakers. Over the years, those senior leaders who have made themselves available and supported the program— some for multiple years in a row—are the key to its success.

This year’s speakers included: Bob Noddin, AIG Japan Holdings KK Patrik Jonsson, Eli Lilly Japan K.K. ■ Heike Prinz, Bayer Yakuhin, Ltd. ■ Stefan Woxström, AstraZeneca K.K. ■ Eriko Asai, GE Japan Inc. ■ ■

Graduates of the 2019 Leadership Series

Natsuko Sato with Bayer President and CEO Heike Prinz

Asai, who is president and CEO of GE Japan and an ACCJ governor, closed the series on April 18 with a focus on inclusive leadership. As the first female CEO at GE, she provided a welcome Japanese perspective for the participants. “I felt great energy from the participants and their willingness to learn about inclusive leadership,” she told The ACCJ Journal. “Having a peer in one’s leadership journey is essential, so I hope everyone will continue to network, learn, and grow from each other through the ACCJ.” Thanking all five speakers on behalf of the ACCJ’s Kansai chapter, Mary Anne Jorgensen, chair of the ACCJ-Kansai WIB Committee, said: “We greatly appreciate their willingness to take time from their busy schedules to expand the perspectives of our young Kansai leaders and to contribute to the development of a stronger and more genki Kansai business community.” But this is not where the story ends. As leadership is a journey of lifelong learning, the ACCJ-Kansai WIB Committee is looking to build a support network for its growing group of Leadership Series alumni and their future peers. Watch for details to come. n

Nadine Slater is a member of the ACCJ-Kansai Women in Business Committee and founder of executive coaching consultancy Excel with Purpose. She coaches international business leaders to raise their game in situations of challenge, change, and transition. Eli Lilly Japan President Patrik Jonsson

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STAFF MAGNETS Developers, innovators offer new office options By Julian Ryall

Defying predictions, Japan’s economy grew at an annualized rate of 2.1 percent in the January–March quarter, up from an expansion of 1.6 percent in the previous quarter. The rise underlines both the strength and potential of the nation’s economy, and makes it clearer to many foreign companies— large and small—that a physical presence in Japan is critical. The need to be here has translated into growing demand for office space. The vacancy rate for large office buildings in Tokyo’s 23 wards sank to 1.9 percent in late 2018, the first time it had fallen into the one-percent range in 18 years.

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RETHINK WORK Changes in how multinationals, small and medium-sized enterprises (SMEs), startups, and entrepreneurs go about their business is also affecting the office-space sector. New technologies and approaches to businesses are transforming the ways in which employees work. Telecommuting, hotdesking, and shared workspaces were rare—even unheard of—a decade ago, particularly among some of Japan’s more traditional companies. But there has been a gradual realization that a shrinking population means that companies must provide optimum working conditions if they want to retain their best people. “Ongoing global urbanization has seen more than 50 percent of the world’s population locate in urban areas,” said Shinji Takeda, senior manager of the Office Business Department of Mori Building Co., Ltd. “By 2050, that figure is expected to exceed 66 percent.

REAL ESTATE

buildings topping 100,000 square meters expected to be the greatest since Mori first began its annual survey in 1986. Tokyo’s office buildings are becoming larger. Pembroke Vice President and Head of Japan Gordon Hatton, who is also co-chair of the American Chamber of Commerce in Japan Real Estate Committee, agrees that the number of Fortune 500 companies with a presence in Tokyo—and Japan’s position as the world’s third-largest economy—make the city an important place for companies to be. This is helped by the “stability and sophistication of the market,” he said. “There has already been a significant amount of office space added in the city in the past few years, and there is more to come. But, still, we see office vacancy rates continuing to compress.”

PHOTO: WEWORK

“When launching a business, it is natural to locate in a city that attracts large numbers of people and corporations. For such cities, magnetism is crucial,” he told The ACCJ Journal. According to the Mori Memorial Foundation’s latest Global Power City Index—an annual study of the strengths and weaknesses of the world’s best-known cities—Tokyo ranks third in the world in overall magnetism, and second in both nominal gross domestic product and stock market capitalization. STAFFING UP According to the Mori survey, 45 percent of companies expect to increase employee numbers in the coming year, which is helping to drive demand for office space. To meet that surging demand, a number of large-scale office properties are scheduled to open in Tokyo in 2020, with a second wave due to hit the market in 2023. In addition, the average floor space of each property is trending upward, with the number of office

LOCATION MATTERS Since 2011 and the Great East Japan Earthquake and Tsunami, the sector has seen companies renting everything from Class A to Class S office space attempting to upgrade their facilities by moving into properties that are more resistant to natural disasters as well as being more comfortable, Hatton said. This has led to smaller and older buildings being demolished and new stock coming on the market. The Otemachi and Marunouchi areas have seen a significant amount of new development in recent years, helped in large part by their proximity to Tokyo Station. Meanwhile, the Roppongi, Shinbashi, and Toranomon districts are becoming more competitive as a result of a number of large-scale projects, while Shibuya and Shinjuku are consistently evolving. Shinagawa is already benefiting from its proximity to Haneda International Airport, and is likely to experience another boost when the maglev train between Tokyo and Nagoya goes into operation in 2027. Pembroke Real Estate operates an office property in Tokyo’s Roppongi district that is home to more than a dozen companies. Both domestic and foreign players in a range of industries have made Tri-Seven Roppongi their Japan base of operations, with the tech and creative sectors topping the list. “Location is always important in Japan, because not many employees will change their residential location for their job. This means that companies have to take into account where they are going to base themselves,” said Hatton, who reiterated the importance of keeping the best employees happy with their working arrangements.

SHINJI TAKEDA

Senior manager of the Office Business Department at Mori Building Co., Ltd.

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GORDON HATTON

Vice president and Head of Japan for Pembroke; co-chair of the American Chamber of Commerce in Japan Real Estate Committee

more in their working environment and demand co-working areas, remote spaces, and scalable offices for future growth. One of the giants of Japan’s office sector, Mori Building rents out about 50 buildings with a total of 760,000 square meters—primarily in central Tokyo’s Minato Ward. The largest single property is Roppongi Hills Mori Tower, which is the workplace of an estimated 15,000 people.

INNOVATION MATTERS ROOM TO SHARE Price is a factor in any decision to move into a new office Technology has hastened changes in how people work. A space, Hatton said, but occupants are increasingly seeking new generation of entrepreneurs and employees is seeking out uniquely designed buildings that will reflect their brand a flexible work environment and user-friendly spaces, and a identity and facilitate a creative work environment. number of relatively new companies are looking to leverage These spaces may include features that make life that this need. much more comfortable. Showers, flexible working spaces, “The government here has been pushing energy-efficient, a coffee shop in the same building, shared open spaces smart-city initiatives, while also pursuing its dream of a that are away from the office, and a ‘new Silicon Valley’ ecosystem that concierge service are perks that can boosts innovation, can lead to the For small foreign companies, potentially serve as the difference discovery of new tech champions, Tokyo can be an expensive and and can trigger the rebirth of when a company is choosing from two overwhelming place to start. or more properties. Japan as a technologically advanced In one building in Seattle, for nation—something that is currently example, employees are encouraged to bring their dogs to being challenged by China, South Korea, and Singapore,” work, and there are said to be 1,000 canine occupants of the said Samir Bennafla, head of new business development property on top of the human employees. It may be some time for Bouygues Asia, which set up the Place2B workspace and before Japan matches that level of pet-friendliness, but Hatton partnership accelerator in Tokyo. says change is coming and that building operators need to be Bennafla sees the Japanese capital as “an excellent play innovative in what they provide. ground for business experimentation and scalability,” According to Mori Building’s research, demand for efficient although companies have, until recently, been required to buy and cheap property space is in decline as companies invest into the traditional office-rental model.

Kaleido Works PHOTO: MORI BUILDING CO., LTD.

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PHOTO: WEWORK

REAL ESTATE

WeWork Ginza Six

“This system is really demanding. It requires companies to make a significant financial investment and to abide by strict conditions,” he said. “Nowadays, shared offices and co-working spaces are gaining a lot of traction, because they help people use the space as a service rather than being required to be an owner with responsibility for management of the space. “We also understand that, for small foreign companies, Tokyo can be an expensive and overwhelming place to start, so we are trying to be competitive on price and flexible to help our member companies kick start and grow their business without being overwhelmed.” For startups looking for a place to hang their hats, Bennafla ticks the priorities off the fingers of one hand:

Location

Style

Opportunity

Vibe

Opportunity includes finding the right place to meet with partners and potential investors, and vibe is an intangible quality that makes a place feel right for the business.

PHOTO: MORI BUILDING CO., LTD.

Price

Kaleido Works

SAMIR BENNAFLA

Head of new business development for Bouygues Asia

KUMIKO HIDAKA

Vice president of public affairs at WeWork Japan

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The traditional concept of a desk in the same office will, sooner or later, become a thing of the past for Millennials.

PHOTO: MORI BUILDING CO., LTD.

PHOTO: PEMBROKE

LIKE-MINDED WORK Arguably the best-known name in the shared workspace area is WeWork Companies Inc. The Japan unit of the company that was founded in New York in 2010 now has 17 properties across the country. Its latest location, with a remarkable 2,900 desks across 20 floors of an entire building in Osaka, will open in June. Kumiko Hidaka, vice president of public affairs at WeWork Japan, says that, as a membership business, the secret to WeWork’s success is less about offering a place to work and more about providing the opportunity to connect, get inspired, and collaborate within a thriving community. “By 2020, half of the world’s working population is going to be made up of Millennials at the same time urbanization increases,” she said. “The trend holds true in Japan, as we are seeing people gravitate towards the cities and there needs to be a variety of workplace opportunities to meet their requirements. “People want to make connections, they want to build and be part of active communities that make it easier for them to communicate,” she said. “In the past, people made an appointment to go to an office and talk to someone. Now, WeWork members are part of a 400,000-strong global co mmunity, and they can go into any one of our locations across 105 cities, including Shanghai, London, Mumbai, and New York, and immediately tap into the local community.” For Hidaka, diversity and dynamism—in career paths, workstyles, and workspaces—will sooner or later become commonplace in the way we work. “Like never before, people value options in their work and they want something that suits them personally, at any given moment,” she said. “It works for the company as well. If companies can give them that, then they are more satisfied and motivated, and their productivity is better. Where is the downside?” n

Artist rendering of the Innovation Center at Toranomon Hills Business Tower

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TIME TO TRAIN Personal fitness options for busy Tokyo execs By Megan Casson

If you want to be successful, exercise is key. A fitness routine not only keeps you healthy, it also helps you focus and boosts your mood. But for busy executives with jam-packed schedules, it’s a habit that can be hard to form and maintain. Personal trainers are a popular way to make regular exercise part of a busy schedule, and to make the most of limited time. To find out what options are available in Tokyo, The ACCJ Journal spoke with local gyms, trainers, and the creator of a new platform that brings workouts to you.

Azabu-Juban, and Naka-Meguro, spoke about the benefits of a custom, one-on-one approach. “Working with a professional trainer totally changes the game. There’s a corrective aspect to the training. Having a trainer continually stand over you, adjusting your posture and refining your exercise form and method, is a huge, almost incomprehensible advantage,” he explained. “Having a personal trainer enables people to get maximum benefit from optimized sessions. Providing tailored, development-centric guidance— pinpointing training elements that clients should be more self-aware of, while helping them effectively execute the training exercises—makes all the difference in the world.”

ONE-ON-ONE Nathan Schmid, managing director and co-founder of Club 360, a multidisciplinary health and fitness practice in Moto-Azabu, said that personal trainers are used by many people as motivation to get to the gym. “But, increasingly, we see that what clients want is to be confident that they are spending their valuable time in the gym in a way that will most efficiently bring the results they desire,” he said. “Correct movement and exercise selection are imperative to ensure you are working towards your goals in a safe and effective manner.” Mitsuru “Mike” Yamaguchi, managing director of B-FIT, a personal training gym chain with locations in Nishi-Shinjuku, Extensive facilities are available at Club 360.

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FITNESS

BEYOND FITNESS The benefits of using a personal trainer are not limited to fitness improvement. “Our trainers are always getting amazing feedback from clients that makes our jobs very rewarding. Most commonly, we hear how people not only changed their body shape, but also were relieved of pain, have more energy, and are enjoying life more,” said Schmid. Many of us spend most of the day sitting at a desk, using computers, tablets, and smartphones, and performing other general work tasks that have an impact on posture. As a result, muscle and joint pain is a big problem. Yamaguchi, a posture and form specialist, expanded on this, citing issues he has seen related to desk jobs. “I sometimes Personal training session at Club360. observe people with posture problems, particularly what is known as forward head posture. Apart from lots of people having desk and computer jobs, which cause them to hunch over at work, this can be seen on the train or when people are walking. Forward head posture is going to become a medical issue of epic proportions.” To combat this threat to health and productivity, B-FIT offers advice to all customers on how to avoid or correct forward head posture. Ensuring proper posture is a key first step before embarking on any sort of exercise journey, according to Yamaguchi. Avoiding pain and further muscle or joint damage is imperative, as injury from exercise is only going to add more aggravation to a busy schedule, as well as work-related aches and pains. “Anybody who spends a lot of time on a smartphone or tablet may want to start thinking about doing some corrective training with us before the forward head posture converts to serious—and sometimes chronic—pain. It’s crucial to keep your B-FIT specialist targets muscle and joint pain with massages. chin in and your chest out, your head and eyes appropriately positioned, and to use your core to support your head and place less making it easier to fit into a schedule. Just Forward head posture is strain on your neck,” he explained. as you would arrange and attend a meeting going to become a medical at work, personal training sessions can “We train people how to do that and steer them away from bad habits, for issue of epic proportions. become a regular—even imperative— which smartphones and tablets are part of life. largely to blame.” In the same way that meeting length varies, customized training sessions are also flexible. As Yamaguchi explained, WORK-LIKE APPROACH “The efficiency and effectiveness of trainer-guided sessions Understanding the importance of fitness and preventative enable executives to have slightly shorter training sessions measures is one thing. Finding time to take action is another. when necessary.” Even when motivation is there, it can be hard for professionals There’s also a discipline element. While people will need to get to the gym. Busy work schedules, personal lives, and self-discipline to train, having scheduled sessions at a set time, family take priority. Often little time remains. Personal trainers on a set day, provides added incentive to go. “Much like with can represent a set engagement that must be attended, therefore business, there is benefit in showing up to a meeting, rolling up

NATHAN SCHMID

Managing director and co-founder of Club 360

MITSURU “MIKE” YAMAGUCHI Managing director of B-FIT

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FITNESS

JORDAN FISHER

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Zehitomo’s directory helps you quickly find nearby trainers.

your sleeves, and putting in the work,” he added. “We push our clients to get good results for themselves. Their personalized interaction with our trainers leaves them feeling invigorated, energized, and ready to go back to their office or home and do some more work.” YOUR TERMS A common obstacle to visiting the gym is the time it takes to get there and back. To make additions to your daily routine stick, they must fit efficiently into your work schedule. Finding a gym within a reasonable distance of the office or home can be challenging. But having a personal trainer do the traveling can make fitness more accessible to busy professionals. This is where Zehitomo comes in. This online platform connects specialists with those seeking services—personal training among them. The ACCJ Journal spoke with co-founder and CEO Jordan Fisher to find out how Zehitomo works. “Customers can make highly customized requests, and service professionals can follow through with highly tailored solutions. We directly introduce you to the most skilled trainers who are a fit for your needs, and you can negotiate the perfect customized solution,” he explained. “We have a large network of trainers who will travel to you directly. They can come to your home gym, your office, or any other location.” Zehitomo offers more than 500 categories of services. For those seeking fitness options, this includes running, yoga, and other specific forms of exercise. In an instant, you can be connected with a trainer who is able to meet at a time and place that works best for you. This makes it much easier to book sessions around existing work and family commitments, making the workout feel like a choice, not a chore. “Our platform captures the custom elements of both sides in our matching algorithm, showing the best results for customer’s needs,” Fisher added. “At the same time, we provide the most cost-effective way for trainers to find new clients and grow their business.”

BALANCE A mix of onsite and offsite training may be the best path for making fitness a regular part of work life. Needs vary from person to person, but knowing the options opens up possi bilities we often feel aren’t there. Personal trainers bring broad knowledge of health and fitness and apply it in highly focused ways to meet the specific needs of each client. “A big part of a personal trainer’s job is to find a way to help clients achieve their goals while, at the same time, working around and improving any injuries or other factors that may hold them back,” said Schmid. “After a thorough assessment of posture, movement and general fitness, Club 360 trainers design programs based on the assessment findings in relation to the client’s goals.” As Yamaguchi pointed out, B-FIT’s courses focus on align ment and posture training, and their personal trainers ensure that exercise movements are being performed in the right way to avoid muscle strain and injury. “We offer programs that are adaptable and are designed based on our assessment of each person’s needs. We develop a training program for them to meet achievable goals.” Curing posture-related aches and pain might make desk work easier and therefore encourage productivity, or alleviate negative feelings towards going to the office. And that’s some thing that can be said for fitness routines in general. The trick is turning need into motivation and motivation into action. Taking an approach that fits more into the workplace mode— scheduling workout meetings with an expert—might just change your health. n One-on-one professional training session at B-FIT.

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JUNE 2019

Industrial activity is a double-edged sword. It has created modern society, but it also threatens it. Climate change has been a concern for decades and poses one of the greatest risks to our future. Of

CARBON ZERO The business case for renewable electricity By C Bryan Jones

particular worry is the increasing amount of carbon dioxide (CO2) in the atmosphere. As a greenhouse gas, CO2 traps heat. This causes global temperatures to rise and triggers changes in our ecosystem, such as rising sea levels, diminishing yields of certain crops, and extinctions that affects the food chain. While a case can be made that CO2 levels rise naturally, the pace seen over the past 60 years is about 100 times faster than the historical record. Left unchecked, this growing abundance of CO2 will transform society—and in turn business—before the end of the century. SENSE OF URGENCY Recognizing the threat, 195 nations agreed to the first-ever legally binding deal on controlling climate change at the 2015 United Nations Climate Change Conference. Known as the Paris Agreement, the deal calls for the rise in global temperatures to be held below two degrees Celsius above pre-industrial levels, and aims for a maximum increase of 1.5 degrees. But the situation may be more dire than previously suggested. A new study published on May 20 in the Proceedings of the National Academy of Sciences of the United States of America finds that unchecked emissions growth could lead to a rise in global temperatures of five degrees Celsius by 2100. This is more than twice the value on which the Paris Agreement recommendation is based and could cause ocean levels to rise by more than six feet—double the most recent estimate from the United Nations Intergovernmental Panel on Climate Change. In such a scenario, New York, Shanghai, and other major cities would be submerged. Although the authors admit that this is a worst-case scenario, it cannot be dismissed. ELECTRIFIED EFFORT To mitigate climate change and begin repairing the damage done to the planet, CO2 levels must be stabilized. According to scientists, to achieve the goals of the Paris Agreement, emissions of greenhouse gases—especially CO2—must be cut 45 percent by 2030 and 100 percent by 2050.

Renewable electricity sourced per year Terawatt hours (TWh) and percentage of total electricity consumption

2015

2016

2017

22% 32% 38% 24 TWh

THE ACCJ JOURNAL

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51 TWh

72 TWh

2026

100% The average target year to reach 100%

ENERGY

One key step to doing this is the global decarbonization of the electricity industry. Given that the demand for electricity is rising, this is no easy task. But many companies are joining an effort known as the RE100, a global corporate leadership initiative that brings together influential businesses committed to 100 percent renewable electricity. Launched at Climate Week NYC 2014 with 13 founding corporate members, the initiative is led by The Climate Group, a non-profit organization with offices in London, New York, and New Delhi whose goal is “a world of no more than 1.5 degrees Celsius of global warming and greater prosperity for all.” Partnering with The Climate Group is The Carbon Disclosure Project (CDP) a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states, and regions to manage their environmental impacts. GROWING LIST Since its birth five years ago, the RE100 corporate initiative has spread around the globe and has seen strong growth in Australia and Japan. Some 176 companies have made a commitment to go 100-percent renewable as members of the RE100, and 16 are Corporate Sustaining Members of the American Chamber of Commerce in Japan (ACCJ). With the G20 Summit taking place in Osaka this month, Japan—currently the fifth-largest emitter of CO2—has an opportunity to take a leadership role on climate change. Ahead of the G20 Summit, The Climate Group presented the RE100 framework and the business case for renewable electricity to national leaders at the G20 Climate Sustainability Working Group (CSWG) in Japan. Held at the Tokyo Conference Center Ariake on February 14–16, the CSWG was hosted by the Ministry of Foreign Affairs and attended by more than 100 representatives of the G20 and international organizations. The Climate Group’s local partner, Japan Climate Partners’ Leadership (JLCP), also presented at the CSWG. As a result of the JLCP’s ongoing efforts, the Ministry of the Environment has set a goal of having 50 Japanese companies be members of the RE100 by 2020. Currently there are 16. One of these is Fujitsu Ltd., which joined in July 2018. Explaining the decision, Hideyuki Kanemitsu, vice president and head of the Responsible Business Unit at Fujitsu, said, “Joining RE100 demonstrates our strong intention to deliver on our Fujitsu Climate and Energy Vision. We expect to see opportunities to collaborate with customers and various stake holders through our RE100 membership.”

Renewable Electricity Use by RE100 Members

Transition to a decarbonized society will generate new opportunities for growth and development.

GUIDING HAND One of the benefits of RE100 membership is a clear framework within which to set corporate policy pertaining to renewable energy. The RE100 helps increase corporate demand for and supply of renewable energy through five key efforts:

Bringing together major companies committed to sourcing 100 percent renewable electricity globally in the shortest possible timeline (by 2050 at the latest) ■■ Setting the bar for corporate leadership on renewable electricity, holding members to account, and celebrating their achievements to encourage others to follow ■■ Communicating the compelling business case for renewables to companies, utilities, market operators, policymakers, and other key influencers ■■ Highlighting any barriers to realizing the business and economic benefits of renewable electricity as reported by member companies ■■ Working with member companies and partners to high light and address policy and market barriers to the corporate sourcing of renewable electricity ■■

While adding 34 more companies over the next 18 months may be ambitious, the target demonstrates Japan’s commitment to reducing CO2 emissions and leading on this critical issue.

56%

United States

Japan

29,045,374 MWh

3,280,144 MWh

JAPAN CLIMATE INITIATIVE Other action that has been taken in Japan is the formation of the Japan Climate Initiative (JCI), which was founded on July 6, 2018, by 105 entities—including companies, financial institutions, local governments, research institutes, and non-governmental organizations representing sectors such as information and communications technology, finance, construction, housing, energy, food, and retail.

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ENERGY

Expanding and accelerating efforts toward a decarbonized society and setting an example for international society will bring significant benefits to Japan.

The JCI’s goals are to: Transition to a decarbonized society Progressively increase reduction targets ■■ Enhance Japan’s commitment to climate change ■■ Serve as a bridge between Japan and global efforts ■■ ■■

The initiative is based on the idea that transition to a decar bonized society will generate new opportunities for growth and development. “We believe that Japan can and should play a greater role in the world in realizing a decarbonized society, primarily through promotion of energy efficiency and expansion of renewable energy,” the group says in its founding declaration. “Also, we are firmly convinced that expanding and accelerating efforts toward a decarbonized society and setting an example for international society will bring significant benefits to Japan itself.” TAKING ACTION By joining the RE100, companies signal their intent to decar bonize and switch to renewable electricity. Per RE100 guidelines, this should be achieved by 2050; but many companies want to get there as soon as possible and encourage others to do the same. The average target year for RE100 members to hit 100 percent is 2026, and more than three in four aim to get there by 2030. ACCJ member company 3M is one of the latest additions to the RE100, having joined in February. The Minnesotabased manufacturing and tech giant is committed to using 100 percent renewable electricity for its global operations by 2050. As is the case with many companies of 3M’s size, completing the transition is a long and complex process. To ensure that steady steps are taken, and the effort stays on track, the company has set an interim target of 50 percent by 2025. “We are continuing to step up our leadership toward a more sustainable future—in our own operations, and in solutions for our customers,” 3M CEO Mike Roman said of the decision to join. Helen Clarkson, CEO of The Climate Group, cited the mutual benefit, saying, “By joining RE100 and switching to 100 percent renewable electricity globally, 3M is building sustainability into its business growth strategy and showing the two go hand-in-hand.” Addressing climate change isn’t new for 3M. Since 2002, the company has reduced its greenhouse gas emissions 68 percent. At the same time, its revenues have nearly doubled.

By building sustainability into its business strategy, 3M has shown that making changes that help save the environment can also lead to better business. This is but one example of the kind of corporate vision that is necessary to see us through to a healthier, more profitable future. NEXT STEPS The more quickly companies hit their targets for decarboni zation and the use of renewable electricity—while also seizing new opportunities and garnering higher profits—the stronger the business case will be. Companies that are weighing the pros and cons of a rapid switch will begin to follow the lead of those already making renewable energy a key part of their strategy. Delays could have an unexpected impact—on both the environment and business. In its presentation at the CSWG in February, The Climate Group used the fall of The Eastman Kodak Company from its dominant position in the world of photography as an example of how failure to anticipate how rapidly external factors will change can catch your business off guard—even if you think you are prepared. The common misconception about Kodak is that they lost because they didn’t grasp the significance of their own invention—the digital camera—and tried to suppress further development, RE100 head Sam Kimmins explained. But the reality is that Kodak saw the opportunity presented by this new technology. They knew that it would replace film, and they developed a robust plan to transition to digital. But they underestimated the pace of change and the way in which it would take place. Today, the company whose name was once synonymous with photography among consumers, deals mainly with digital printing and other professional services for business. The world is in a period of transition, teetering between the fossil fuels of yesterday and the renewable energy sources of tomorrow. Both are in play, but only one is sustainable. Access to clean power is not just an environmental issue, but one of economic competitiveness—for companies and countries. n

Among

176 RE100 members . . .

38%

is the average renewable electricity usage

members use more than 95% renewable electricity

THE ACCJ JOURNAL

JUNE 2019

UNITED LIFE Finding workâ&#x20AC;&#x201C;life balance and social change through global experience By John Amari

Venture capitalist and impact investment trailblazer Eriko Suzuki knows a thing or two about mid-career change and taking on ever-greater challenges. After all, her career has straddled several fieldsâ&#x20AC;&#x201D;from investment banking to startups, retail to impact investing, and even venture capital.

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ENTREPRENEUR

And that’s not to mention an upbringing that began in Japan but has included time spent in the Middle East, North America, and Africa. Today, she is a general partner at venture capital firm Fresco Capital and an advisor at impact investment company Mistletoe Inc. At the same time, she has created a women’s wellness community and raised a family. How has Suzuki accomplished so much in such a short time? The secret is an integrated life in which work and family are seamlessly blended. “At the end of the day, you’re not two personas—the one at work and the one at home. And you’re not a machine. I think it’s more natural to have a life that’s integrated, and that is increasingly possible thanks to technology,” Suzuki told The ACCJ Journal. AN OPEN BOOK Achieving a perfectly seamless work–life balance is not some thing that Suzuki had easily managed. Her efforts to do so have been ongoing, and include struggles and missteps. “I’ve learned a lot through failure,” she said. “I sometimes failed in communicating with my teammates when my child was sick, for instance; or in communication with my partner. I thought I could fake it and act like everything was okay.” Suzuki is talking about one of the most challenging moments in her life—a time shortly after she had her second child while also holding down a full-time, strategy and finance position at luxury goods retailer Coach. While working conditions at Coach were an improvement on the long and stressful days as an investment banker, raising two children and working a full day remained a challenge. At first, Suzuki tried to manage both ends of her life without fully leveraging the support of colleagues or her partner, giving the impression that all was well. However, that strategy only served to raise expectations of her ability—expectations that sometimes didn’t match the reality of her inner struggle to cope. As the stress of trying to be all things to all people mounted, it became clear that she had to change something or risk putting her health in jeopardy. In the end, Suzuki chose transparency and sought greater support from family and colleagues. “Finding key stakeholders or key supporters at work is always good. But unless you start voicing your concerns, no one will know about them.”

CHILDHOOD DREAM Born in Tokyo, Suzuki’s early years were spent in the Middle East and North America, with stints in Africa and Japan. When she was four years old, her family relocated to Houston, Texas. Three years later, they were on the road once more— to Toronto, Canada. When they returned to Japan for two years when she was a junior high school student, she suffered a “reverse culture shock,” she recalls. And then she was uprooted again, this time to Bahrain, an island nation in the Persian Gulf. That is where she spent her high school years. Those early experiences living in diverse cultures had a major influence on Suzuki’s life and career plans. So, it’s not surprising that her work today revolves around impact investing, a form of investment that focuses on both returns and social outcomes. “I had the privilege of living abroad from a young age, and had this passion for development and a sense of the inequality of opportunities. So I really wanted to work for the World Bank. When I was 13 years old, I thought that would be my career, and I really planned my whole life around that.” With colleagues at Morgan Stanley.

At the end of the day, you’re not two personas—the one at work and the one at home. And you’re not a machine.

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ENTREPRENEUR

LESSONS LEARNED With a career at the World Bank beckoning, Suzuki won a scholarship to McGill University in Canada, where she double majored in economics and development studies with a minor in mathematics. Between her second and third year at college, she took time off to work as an intern for a World Bank-affiliated organization with operations in Kisumu, a large port city on Lake Victoria, in western Kenya. There, she was tasked with analyzing perso nal micro-finance models and infrastructure development programs piloted in the region by the European Union. While that experience was invaluable to her as a young person, she admits that it had limitations. “It was a great opportunity, but, while I was there, I felt so incapable. I couldn’t speak many of the local languages in that region.” But language was not the only issue. “The work itself was quite bureaucratic. It was not bottomup, it was not localized, and it wasn’t really empowering for the local community.” What’s more, micro-finance models, which include such programs as providing loans for school fees, didn’t necessarily support sustainable development—especially entrepreneurship. “The enterprise aspect was lacking,” she said. “What else can a person do to sustain their livelihoods after they’ve received a loan—whether it’s starting a honey production business or increasing their stock of cattle?” Seeing the shortcomings of a top-down approach to empowerment, Suzuki came to a simple realization: “This bureaucratic type of work is probably not for me.” For a high-flyer with a passion to do good, the rough-andtumble of investment banking seemed to be the next big step on the path to social impact investing.

BABY STEPS Suzuki’s first step into work was at Morgan Stanley in Tokyo, where her focus was on mergers and acquisitions for financial institutions. That was in 2008. “It was a really interesting time because, just as I entered investment banking, the global financial crisis happened.” Caught in the maelstrom of the crisis, many in the invest ment world—including Suzuki—wondered about their future. But Suzuki recalls family support: “I was young at the time, and my father, who is a banker, said to me, ‘It’s a great experience; try to learn from it.’” Three years later, with a wealth of real-world experience under her belt, Suzuki transitioned to UBS Group AG, a global investment bank headquartered in Switzerland. While the work she did at UBS was similar to what she had done at Morgan Stanley, there was one difference: while at the Swiss bank, she had her first child. “Especially in investment banking in Japan, that was not a common thing to do,” she said. Having a child and continuing her work was a “huge deal” at the office, but Suzuki was pleasantly surprised to find that her team was supportive. “At the same time, everyone, including myself, was clueless as to how a mom could work in an investment bank.” Suzuki’s working day at the time typically ran from 8:00 a.m. to midnight. To make things work, she had to reduce her hours and take a 50-percent cut in salary. “I then had to find daycare, and it was a struggle. The system was very inadequate to accommodate someone like me. It still is in Japan.” MAKING AN IMPACT Suzuki’s largely positive experience as a working mom—espe cially at Coach, where her colleagues offered “co-parenting” support—did not happen without challenges. At UBS, she was racked with guilt because of her reduced hours, and felt the arrangement was not fair to her colleagues. She also believed the reduced hours would work against her future prospects, as she would be classified as not having worked full time. That sense of guilt and perception of missed opportunities precipitated her transition to Coach. Yet, even with improved working arrangements at Coach, a nagging question resurfaced: “Am I going to do something impactful, especially social-wise?”

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THE INTEGRATED LIFE Having transitioned from banking to retail to startups, and now investing, what does the future hold for Suzuki? “I’m super-excited about my work right now. Through Fresco, I’m looking forward to investing in startups, and creating a new generation of enterprises and economic influencers,” she said. “We get to play a little part in how founders think, how they build teams, and how they make their mark in the global market.

ENTREPRENEUR

Tapping into her network, she connected with Skycatch, Inc., a San Francisco-based startup that provides drone-based imaging services. Looking to enter the Japanese market, the company initially sought Suzuki’s advice and eventually hired her as their Japan country manager. But when the opportunity to extend her footprint in the innovation space—and realize her dream of making an impact— presented itself, she joined Mistletoe, Inc. as director of investments. Mistletoe focuses on startup investment, research and development, joint ventures, and ecosystem development with the goal of creating a sustainable human-centered future using technology. “It was like a dream come true, because impact investing is a growing field—even in Japan.” Today, Suzuki is still part of the family at Mistletoe, even as she maintains her role at Fresco Capital. Indeed, Mistletoe made an investment in Fresco’s third fund, which recently closed.

“And in Japan, I’m very passionate about women’s empowerment. I just think that diversity in thought and diversity in background creates better, more interesting, and richer societies.” To that end, Suzuki has written a book entitled How We Live Will Be How We Work (Daiwashobo 2018), and created MIKO (formerly known as Future Females Japan), “a women’s holistic wellness community where we meet twice a month to practice mindfulness—be it yoga, meditation, or life-coaching.” And the ultimate goal of MIKO? “To integrate our lives and work, collectively, for a better society.” n

Suzuki spoke in Paris at Vivatech, one of the leading conferences in Europe attended by 124,000 people from 125 countries.

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JUNE 2019

OVERTOURISM Can Japan handle Abe’s visitor push? Text by Eri Sugiura Photos by Ken Kobayashi

Yuko Kato, a 50-year-old housewife, was raised in Kyoto and has lived there all her life. Going to the 1,300-year-old Nishiki Market, known as “Kyoto’s kitchen,” to buy fish, pickles, and seasonings used to be a weekly habit for her. But that has changed over the past five years. These days, the traditional retail market, which covers five blocks of narrow laneways lined with shops, is overrun by foreign tourists. Many of them eat skewered shrimp and other local delicacies as they stroll, making it difficult for daily shoppers to go about their business. Posters that read “No Eating While Walking” are pasted everywhere but are largely ignored. “Today, I’d rather go to a department store, and only come to Nishiki when I really need to,” said Kato. “Now we have so many new shops for tourists serving green-tea-flavored sweets or takoyaki [small balls of deep-fried batter filled with octopus pieces]. Kyoto’s Nishiki has disappeared.” While the increased tourism should imply bustling business, it has been the reverse for Nishiki Daimaru, a 60-year-old fish outlet that is one of more than 100 shops in the market. Its owner says 80 percent of his customers are now foreigners.

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JUNE 2019

As a result, sales have declined for the past three to four years. Tourists tend to buy only small amounts of sashimi (slices of raw fish) to eat in a dining area at the back of his store, whereas, in the past, locals shopped there for their daily needs, he said. Katsumi Utsu, chief director of the market, said Nishiki is now a “crush of spectators rather than a lively scene of local shoppers.” RISING NUMBERS The situation at the Nishiki Market—and indeed in Kyoto overall—may be a harbinger of things to come for other cities in Japan. With inbound tourism surging, the country is grappling with the government’s plan to develop the industry into a new pillar of the economy even as over-tourism threatens to burden historical sites and infrastructure. In 2018, foreign visitor arrivals jumped 8.7 percent—to 31.19 million—from a year earlier. And, as Japan sprints toward two major sporting events—the Rugby World Cup 2019 and the 2020 Tokyo Olympic and Paralympic Games—the numbers are expected to keep rising. Goals set by Japanese Prime Minister Shinzo Abe in 2016 aim for 40 million foreign tourist arrivals in 2020 and 60 million in 2030. Abe is also working to stimulate domestic tourism. This year’s annual Golden Week holiday ran longer than usual—a period of 10 days from April 27 to May 6. The extension was to celebrate the coronation on May 1 of Crown Prince Naruhito as emperor. Data from JTB Corporation, Japan’s leading travel

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agency, showed the number of residents who planned to travel domestically during the period was up 1.1 percent on the year; those with plans to travel abroad were higher by 6.9 percent. The surge in foreign visitors to Japan reflects a gradual easing of travel visa requirements since 2013 for visitors coming from countries such as Thailand, the Philippines, and China. Growth in the number of budget airlines in Asia and a depreciation in the yen have also made Japan one of the most popular destinations in the region. According to the United Nations World Tourism Organization, Japan was the 12th-most-visited country in 2017. It also recorded the highest growth in tourist arrivals, outpacing Vietnam, Chile, and Thailand. “Japan has its own unique attraction for foreigners . . . especially its food and drink culture,” said Tyler Palma, an American who is Tokyo office manager for tour operator InsideJapan Tours. “How Japanese people approach sake, for example, is very different to how British approach beer,” said Palma. “Japan is a destination for those who appreciate local culture.”

famous as the setting for the 2000 film The Beach, starring Leonardo DiCaprio, has been off limits to tourists since June 2018 due to damage to the surrounding coral. And the Philippine resort island of Boracay closed for six months last year to deal with sewage problems. In Japan, strain caused by the rising number of tourists is probably most visible in Kyoto, the ancient capital. Known for its beautiful shrines, temples, and elegant gardens, the city has long welcomed domestic and foreign tourists—but local tolerance levels are being tested. A 68-year-old man waiting at JR Kyoto Station, the gateway to the city, said he tries to avoid taking buses from the station because they are crowded with tourists and their large luggage. “I need to wait for one or sometimes two buses to get on,” he complained. According to a survey by the city, 7.4 million foreign guests traveled to Kyoto in 2017, a more than fivefold increase from 2012. Including domestic tourists, the city hosted 53.6 million visitors in 2017, dwarfing its population of 1.5 million. While the total number of guests was down 3 percent from the previous year, reflecting fewer domestic travelers, “More than 70 percent of the foreigners were first-timers to Kyoto, so the crowds were concentrated in well-known temples and sites,” noted Kazuya Fukuhara, managing director of the city’s tourism office. Joanna, a 29-year-old tourist from the UK, was astonished when she visited Fushimi Inari Shrine with her boyfriend and saw it packed with tourists taking selfies in front of its thousands of statuesque vermilion gates. “Although we wanted to go see the forest at the end of the gates, we decided not to go. We just couldn’t walk because of the crowds,” she said. Daisaku Kadokawa, the mayor of Kyoto, insists that the overcrowding occurs “only in some limited areas,” but he agrees the city “is not designed for sightseeing, nor to be a theme park.” Kyoto has taken measures to lessen the negative impact of guests at well-known sites such as Fushimi Inari and Arashiyama, a district famous for its towering emerald-green bamboo groves. These measures include discounted tickets for the subway to ease pressure on its bus network and publishing the volume of visitors on its website so that people can avoid peak times. Palma of InsideJapan Tours said: “I am very sad about Kyoto. There is currently very little benefit for the locals [from tourism]. It is a city that deserves a higher quality of visitor—those who have an appreciation for local culture and custom.” Kyoto’s 1,300-year-old Nishiki Market

NOT A THEME PARK The problem of over-tourism is not restricted to Japan. Thailand, Asia’s most popular destination, welcomed more than 38 million visitors from abroad in 2018, up 7.5 percent from the previous year. Maya Bay in the Phi Phi Islands,

THE ACCJ JOURNAL

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250

SOURCE: JNTO; MINISTRY OF LAND, INFRASTRUCTURE, TRANSPORT AND TOURISM

60 50 40

Spending shrinks from 2015 peak

30 20

220

200

190 60 160

10 0

250

130 100

2011 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’20* ’30*

International tourists (left, in millions) Spending per capita (right, in thousands of yen) * Government target

PUSHBACK Grassroots opposition to the rising number of tourists appears to be at odds with the government’s policy of cultivating the industry. The sector has seen sharp growth in recent years, compared with weakening competitiveness in manufacturing and other industries. Spending by foreign visitors hit a record ¥4.5 trillion ($40.1 billion) in 2018, quadruple the amount spent in 2012, according to the Japan Tourism Agency (JTA). Data from the JTA also reveals that while more foreigners are coming to Japan, their per-capita spending has slipped for the past three years. It came in at ¥153,000 in 2018, down one percent from 2017. The government aims to raise this to ¥200,000 by 2020, a challenging but necessary goal if it is to meet its lofty target of ¥8 trillion in annual spending by foreign tourists in the same year. The government hopes some of the money will make its way to economies outside the major urban areas, particularly those struggling with depopulation and rapidly aging communities. Japan’s native population fell at a record annual pace in 2018, and the number of people aged 70 or older reached a fifth of the population for the first time as of September 2018.

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Tourism Wave: Numbers Swell, but Spending Ebbs

“Tourism has become a trigger for regional revitalization,” Abe said in September at a meeting of his Tourism Strategy Promotion Council. “Foreign tourists seek scenery and experiences that are unique to each area, which offers great opportunities for all regions.” Japan needs to “monitor and manage tourism based on a clear purpose,” said Graham Miller, a professor at the UK’s University of Surrey, who also teaches at Wakayama University in Japan and specializes in sustainable tourism. “Multiple contradictions are happening when enhancing tourism. Simply bringing foreign tourists to Japan, or helping stimulate regional economies; which is the priority for the Abe administration?” EASING THE PRESSURE Spreading the number of tourists around might relieve some of the pressure on traditional tourist magnets such as Tokyo, Kyoto, and Mount Fuji. Video clips posted by the Japan National Tourism Organization (JNTO) on its website show Millennials enjoying hikes in the mountains, traditional arts in less-well-known museums, and meals in local eateries. Rural destinations such as the Japanese Alps of Kamikochi in Nagano Prefecture and the Sand Museum in Tottori Prefecture are promoted to “entice long-haul travelers to . . . explore the country beyond the well-known popular attractions.” These clips are a sharp contrast to a 2012–14 campaign that emphasized temples, geisha, cherry blossoms, sumo wrestling, and other traditional images. “Japan has moved from simply chasing the number of visitors to spreading these visitors around the country,” said Takayuki Miyajima, senior eco nomist at Mizuho Research Institute Ltd. It means they will “spend more on lodging, which should help to offset lower percapita spending,” he said. But even if tourists start to explore the rest of the country, it’s not clear those areas will benefit. Much depends on the logistics infrastructure in any given area, explained Yuichi Yamada, chief researcher at think tank Japan Travel Bureau Foundation. Although a smaller city might attract a world-class hotel chain and tourists, this will not help the local economy if the hotel uses imported food, and linen and cleaning services from Tokyo or other nearby big cities. This is usually the case in remote areas because local suppliers rarely have the capacity

The famous bamboo groves of Arashiyama, Kyoto

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JUNE 2019

Take a tour of Japan’s premier European-Style Boarding School

AUGUST 4, 24–25 | SEPTEMBER 21–23 | OCTOBER 5–6 Jinseki International School, which will be located in Hiroshima Prefecture and is scheduled to open in April 2020, will be the ﬁrst of its kind in Asia: a European-style international boarding school for elementary school children.

Parents who would like to know more about this unique learning environment can take a tour of the school and surrounding area of Jinsekikogen-cho.

For more information, go to https://jinsekikogen.co.jp/en/brieﬁng

PARTNER CONTENT

Where Japan’s Tourists Come From (Place of origin and share of tourist arrivals, in percent) 26.9

24.2

15.3

China

South Korea

Taiwan

7.1 Hong Kong

4.9

21.6

U.S.

Other

Where They Go (most popular destinations in Japan, in percent) 46.2

Tokyo 38.7

Osaka Chiba

Kyoto

25.9

Fukuoka

9.8

Aichi

8.9

Kanagawa

8.5

Hokkaido Okinawa

7.7 7.3

Japan’s capital

Japan’s second-biggest city

Tokyo Disney Resort

Japan’s historical capital

Flight hub and cruise port On the Golden Route (between Tokyo and Osaka) Yokohama and Hakone (day trips from Tokyo)

Sapporo; ski resorts such as Niseko Japan’s island resorts

SOURCE: JNTO

to handle large numbers of tourists. As a result, said Yamada, which covers Niigata, Nagano, and Gunma Prefectures and “Some areas are exploited by tourism, with most of the profit attracts hundreds of thousands of visitors every year. flowing out of the region.” Some industry experts downplay the problem of overNiseko, a well-known ski resort on the northern island tourism. “Locals in Kyoto and elsewhere are just being emo of Hokkaido, may be a case in point. It and neighboring tional when they complain about such problems,” said David Kutchan have changed dramatically as a result of tourism. Atkinson, chief executive officer of Konishi Decorative Arts The two towns have a combined population of 20,000 & Crafts Co. Ltd., which specializes in restoring cultural and attracted 270,000 foreign tourists in 2017. Kutchan’s assets and national treasures. Atkinson, who is also a special commercial and residential adviser to the JNTO, said, “Japan land prices were up 59 percent does not have any time to waste According to the United Nations to counter its depopulation crisis.” and 50 percent, respectively, as of January 1. Those were the Only a decade ago, Kyoto was “a World Tourism Organization, two biggest gains nationwide, away from decline,” but it has Japan was the 12th-most-visited step according to an annual survey been revived by the jump in foreign country in 2017. by the Ministry of Land, tourists. “Infrastructure will fall into Infrastructure, Transport disuse as the population decreases,” and Tourism. he added, noting this is why it is so important to bring However, the condominiums in the area are typically in tourists. developed by foreign investors and sold to foreigners, While he agrees that local authorities and companies are according to Yamada. not taking enough initiative to solve on-the-ground issues Niseko has long been a success story of foreign money related to tourism, Atkinson insists that, when it comes down revitalizing a regional ski resort, but “a lot of the money to it, “Japanese people need to realize they are not in a leaves the region” because the property is largely foreignposition to ask too much.” n owned. Although some restaurants run by locals benefit from foreign skiers, “Most of the locals may think, ‘we are not receiving enough benefit,’ ” he added. “Japan simply focuses on the number of visitors, like Disneyland does. But we should not forget its impact on ©2019 Nikkei Inc. Nikkei Asian Review is published the daily lives of the local people,” said Tomohiro Iguchi, by Nikkei Inc. All rights reserved. representative director of the Snow Country Tourism Zone,

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JUNE 2019

MARKETING

STAY RELEVANT WITH AI Are you taking full advantage of technology? By Robert Heldt

The recent growth of artificial intelligence (AI) has changed the way marketers go about their business. It has added a whole new dimension to the task of remaining relevant.

AI timeline 48% Before the end of 2019

22% Before the end of 2020 18% Already in place

In addition to addressing redundant tasks and customer communication needs, AI platforms can understand customers, analyze consumer data, and provide a contextual marketing experience. Since the introduction of customer-relationship management software—the now-critical CRM—companies have improved their relationships with those who purchase their goods and services. But now we are seeing a major shift. Nearly 30 years after Siebel CRM Systems, Inc. unleashed the first true CRM, solutions powered by AI are giving marketers and content creators new methods of personalization—virtual assistants, chatbots, and product recommendations—to tempt customers to buy more. Currently, while only 7 percent of businesses are correctly using AI to optimize marketing and ad campaigns, 42 percent are in the testing phase. AI has moved past simply collating and analyzing user data, and can now predict consumer behavior. But should brands dive into this? UP CLOSE AND PERSONAL Today’s consumers have more choices than ever. What to buy? When? How? These questions are more complex than before: the process more difficult for the buyer, and it is harder for brands to cut through the noise. In 2019, you must be one step ahead of consumers to remain relevant. Consumers have high expectations: if they don’t feel that you are speaking to them about their particular needs, you won’t succeed.

How important is personalization for companies? UK Benelux

Seen as important

88%

35%

Germany

Switzerland

88%

22%

France

Nordics

91%

30%

42%

89% 88%

23% 35%

89%

Offering the right level

Within 3 to 5 years No current plans

According to research conducted by creative software developer Adobe Inc. between August 21 and September 12, the vast majority of marketers believe personalization is important to customer experience and business. However, there is a large gap between expectation and reality in many industries. Demographic segmentation has assisted the pursuit of successful marketing by targeting the right audience at the right time. And while segmentation offers better insight into marketing, it tells us little about a consumer’s interests and future behavior. The use of AI, however, allows brands to dig deeper and pre dict what a consumer might do. Often, connections emerge that weren’t seen before. Using this data, we can create experiences tailored to each consumer, with AI delivering a better user experience and increasing our chances of making a sale. AI AND MARKETING Businesses have long used data collection to shape marketing strategies, but having too little or too much data can prevent a company from reaching its target audience. According to Adobe, 60 percent of companies believe the biggest barrier to drawing quality insight from customer data is that too much data is collected from too many sources. And while they fight to surface from this flood of data, 51 percent also say they struggle to meaningfully combine, structure, and integrate data. If making sense of consumer data is draining your resources, then you aren’t delivering a satisfactory customer experience. AI may be the answer. FUTURE AI Having recognized the need for increased personalization and customer experience, a majority of industries are investing in AI to advance their operations. Some 48 percent say they are working to implement AI for improved personalization in 2019, and another 22 percent are targeting the end of 2020. It is expected that the coming 12–18 months will be significant for the AI community. Keeping up with this technological requires investment and resources, but the benefits outweigh the initial burden. AI is changing the world of content marketing. Are you taking full advantage of it? n

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J-MEDIA

DIET DAILIES

Japan policy updates translated from Keizaikai magazine

FINANCIAL SERVICES AGENCY

RISKS OF SINGLE-PAYMENT INSURANCE POLICIES A new source of revenue for regional banks may be under threat. Single-payment, foreign currency-based insurance that is payable at banks’ service counters is facing scrutiny from the Financial Services Agency (FSA). The filing of successive complaints with the National Consumer Affairs Center of Japan prompted one FSA official to suggest sufficient explanations are not being provided concerning the risks of such products. And upon surveying 20 regional banks, the FSA determined that the number of policies sold had increased rapidly— nearly doubling in two years. This growth was particularly conspicuous considering the lower 1.2-fold growth at Japan’s nine megabanks. The insurance in question is purchased by means of a one-time outlay, with the price tied to the value of the US dollar or other foreign currency. In addition to benefits being paid out should death occur during the coverage period, the operating revenues are also paid out when the period of coverage expires. Because the amount is based on the initial premium, these products can be considered investments. The policies appeal to older individuals who have begun receiving their pensions, and are also considered an option for investing the bonus that is paid out to retiring company workers. Sufficient consideration needs to be given to the viability of these policies as a means of support for those in their senior years. This point is made evident in pamphlets explaining that payout is only guaranteed in the original foreign currency, which may be affected by fluctuations in the exchange rate. As an FSA officials said, “Even professionals don’t know what the exchange rate will be 10 years from now, so it’s a high-risk product.” In recent years, Japan’s regional banks have found themselves under the FSA’s disapproving glare over questionable practices related to credit-card loans, apartment loans, and other products. This scrutiny has led to a reduction in such activities, and history may soon repeat itself.

Ring Road No. 2 running through Tsukiji

MINISTRY OF LAND, INFRASTRUCTURE, TRANSPORT AND TOURISM

SPECIAL HIGHWAY SURCHARGE DURING THE OLYMPICS To reduce traffic during the Tokyo 2020 Olympic and Paralympic Games, the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) is considering adop tion of a road-pricing system that would raise tolls on the Tokyo Metropolitan Expressway from ¥500 to as high as ¥3,000. MLIT and the Metropolitan Highway Corporation asked the Tokyo Organising Committee of the Olympic and Paralympic Games—as well as the Tokyo Metropolitan Government—to take the matter under consideration, but the two are said to have been unable to come up with any other concrete ideas. In its bid, Tokyo pitched the concept of a “compact Olympics”—one in which the athletes staying at the Olympic Village would be able to access events in 10 minutes or less. Making this a reality, however, has proven difficult.

Ring Road No. 2—a 14-kilometer (8.7-mile) stretch connecting Ariake in Koto Ward and Kandasakuma-cho in Chiyoda Ward—will pass near the Olympic Village in Harumi, and the initial concept called for it to be made available only to athletes and participants of the Games, or to give them priority. It was calculated that travel from the Olympic Village to Kasumigaseki would take about 10 minutes if an exclusive Olympic-use lane were designated on the regular thoroughfare. However, due partly to the delay in transferring the city’s main fish market from Tsukiji to Toyosu, the opening of the tunnel on Ring Road No. 2 has been delayed, forcing a rethink. And this brings us back to the ideas of higher tolls. Planners realized two years ago that Ring Road No. 2 would not be completed in time for the Olympics, but the gov ernment and organizing committee were unable to come up with anything better than an exclusive-use lane and price increase to discourage road use and decrease congestion—an idea some MLIT officials have complained about bitterly. n

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JUNE 2019

The ACCJ thanks its

Corporate Sustaining Member companies Their extensive participation provides a cornerstone in the chamber’s efforts to promote a better business climate in Japan. Information as of May 24, 2019.

PRESIDENT‘S CIRCLE 3M Japan Limited

Federal Express Japan G.K.

Mizuho Financial Group, Inc.

Abbott Laboratories/ Abbott Japan Co., Ltd.

Freshfields Bruckhaus Deringer Tokyo

Monex Group, Inc.

AbbVie

GE Japan Inc.

Adobe Systems Co., Ltd.

Gilead Sciences K.K.

Aflac

Goldman Sachs Japan Co., Ltd.

AIG Companies in Japan

Google G.K.

Amazon Japan G.K.

GR Japan K.K.

Amway Japan G.K.

H&R Consultants K.K.

Asia Strategy: Business Intelligence, Public Policy, Advocacy

Hard Rock Japan LLC

Morgan Stanley Japan Holdings Co., Ltd. MSD K.K. Naigai Industries, Inc. Nanzan Gakuen (Nanzan School Corporation) Northrop Grumman Japan Oak Lawn Marketing, Inc.

AstraZeneca K.K.

Heidrick & Struggles Japan Godo Kaisha

Bayer Yakuhin, Ltd.

Hilton

Pattern Energy Group Inc.

Becton Dickinson Japan

The Howard Hughes Corporation

Procter & Gamble Japan K.K.

Bloomberg L.P.

IBM Japan, Ltd.

Prudential Financial, Inc.

Boeing Japan K.K.

IHG ANA Hotels Group Japan

PwC Japan

Bristol-Myers Squibb K.K.

Intel K.K.

Brookfield Asset Management

IQVIA

Caesars Entertainment Japan Catalyst

Johnson & Johnson Family of Companies

Refinitiv Japan K.K.

Caterpillar

KPMG

Relansa, Inc.

Chevron International Gas Inc. Japan Branch

Lenovo Japan Ltd.

Robert Walters Japan K.K.

Lockheed Martin

Squire Patton Boggs

Cisco Systems G.K.

Mastercard Japan K.K.

State Street

Citigroup

Steelcase Japan K.K.

Coca-Cola (Japan) Co., Ltd.

McDonald's Company (Japan), Ltd.

Corning

McGill Japan

Cummins Japan Ltd.

McKinsey & Company, Inc. Japan

Deloitte Touche Tohmatsu LLC

Melco Resorts & Entertainment Japan Limited

Delta Air Lines, Inc. Deutsche Bank Group

Morgan, Lewis, & Bockius LLP

Ogilvy Japan Group

Qualcomm Japan LLC Randstad K.K.

Teijin Limited Uber Japan Co., Ltd. United Airlines, Inc. Visa Worldwide (Japan) Co., Ltd. VMware Japan K.K.

Discovery Japan, Inc.

Merrill Lynch Japan Securities Co., Ltd.

The Walt Disney Company (Japan) Ltd.

Dow Chemical Japan Ltd.

MGA Japan K.K.

Western Digital Japan

en world Japan

MGM Resorts Japan LLC

White & Case LLP

EY Japan

Mitsuuroko Group Holdings Co., Ltd.

Zimmer Biomet G.K.

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JUNE 2019

A pioneer in prestigious real estate Kara Blanc in Minami-Azabu

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